K-12 Student Loan Industry

The GOP tax bill’s inclusion of 529 plans for K-12 private tuition has been widely criticized as yet one more provision that aids the wealthy. That’s because only wealthy families have enough money on hand to sock away $10,000 a year toward each child’s K-12 private school tuition….

… The 529 provision in the tax bill is more than anything else a boon to the growing K-12 private school loan industry.

…Unlike higher education, where a student borrower’s financial relationship with colleges and lenders is well defined by federal and state laws, K-12 private education is a largely unprotected landscape.

Take Indiana, for instance, home of the largest private school voucher program in the nation. Despite paying out $146 million last year in publicly funded tuition vouchers for private schools, the Indiana Department of Education doesn’t even have the right to see the enrollment contracts or student handbooks that govern the payment policies on that money, let alone provide any consumer protections to students who attend those schools. Unlike colleges, private schools at the K-12 level are almost completely free to impose whatever enrollment and financial policies they please. Lenders for K-12 also face far fewer restrictions than lenders for higher education.

Private schools even have the ability to double dip if they want, forcing one set of parents to pay tuition for the rest of the school year after their child withdraws (or is expelled) mid year AND enroll a replacement student and collect tuition from that one too. Churn, double dipping, and abuses in marketing and advertising can all occur in Indiana private K-12 schools, and there are currently no state or federal laws that would prevent such practices.

Evergreen: So Much Stranger than That

I’m a professor at Evergreen State College, currently on leave. Last year I lived through the events that were captured on videotape and brought the college a lot of unwanted publicity. As a social scientist, long interested in organization theory and social movements, I found the experience grimly fascinating, an extraordinary case study. In my writing on it, I try to focus on understanding how such things could occur, rather than apportioning blame to specific individuals, which, from what I can see, has been the main sport.

Today I read another post mortem by Bret Weinstein and Heather Heying, published in the right wing Washington Examiner. Disclosure: I know both of them, and I had a positive experience co-teaching for a quarter with Heather several years ago in Evergreen’s environmental masters program. I’m not socially connected to either of them, and I haven’t had political discussions with them either. I agree with some of what they say in their latest missive, and disagree with other parts. Readers of this blog, who are far from the scene and wonder who and what to believe, might find my reactions interesting.

There is an obvious, fundamental point on which the three of us see eye to eye: Evergreen descended into an atmosphere of intimidation, in which the right to speak, no matter how civilly, was openly attacked. There was a group solidarity logic at work: if you affiliated with one group on campus, you could speak your mind in public and be immune from any scrutiny regarding the tone or logic of your utterances; if you didn’t you were expected to remain silent. This pressure was felt by faculty and students alike. It was in this context that disruptive actions by students escalated over many months until they paralyzed the college. It’s remarkable that it even needs to be said that this situation is intolerable for an institution of higher education.

Personally, I think it is bizarre that Weinstein and Heying would be sent packing by the college under the same terms—the same monetary settlement—as Naima Lowe, whose verbal attacks on her colleagues caused enormous damage to Evergreen. This is not a verdict of the “which side are you on” sort. It’s not about whose political views you agree with or who you like or don’t like on a personal level. Weinstein and Heying had a case against the college, and the college had a case against Lowe. There wasn’t a shred of symmetry in this situation.

One critical aspect of the Evergreen imbroglio goes unmentioned in the Weinstein-Heying account, the barrage of terrifying, intimately threatening emails that bombarded students and faculty after Bret appeared on Fox News. The wording in these emails reeked of racism and was often graphic, about specific acts of violence, and some students went into hiding because they couldn’t be sure the hatred was only verbal. To be clear, I don’t blame Bret for that, at least in this sense: I’m pretty sure it never occurred to him that this would result from coverage by conservative media, and no doubt most of it would have taken place even if he had said “no” to Tucker Carlson. Still, it’s an important part of the larger story, and if you offer an account of what happened you shouldn’t cherry-pick the parts that support your side. Speaking for myself, I was appalled by this tsunami of hate, and I didn’t feel it was enough to say, this is just the alt-right being the alt-right. We are all of us responsible for the predictable consequences of our actions, even if we aren’t the ones carrying them out.

But there is also an aspect of the Evergreen story, in many ways the most important one of all, that I think Weinstein-Heying got wrong. The way they tell it, a left wing minority made a power play on campus in order to enact a radical, identity-fixated political program, the notorious Equity Plan. This plan, they say, would have destroyed much of what made Evergreen a vital force in education, and the purpose of the intimidation was to push it through. They cite one sentence from the plan document that calls for bringing diversity and equity criteria into decisions of what faculty specializations to hire in. It is the Equity Plan that, in their account, makes the conflict political, a battle over which policies would be adopted by the college.

You Don’t Own That! The Evolution of OwnershipGet off my lawn. (repost)

In a recent post on the “evolution of money,” which concentrated heavily on the idea of (balance-sheet) assets, I promised to come back to the fundamental idea behind “assets”: ownership. Herewith, fulfilling that promise.

There are a large handful of things that make humans uniquely different from animals. In many other areas — language, abstract reasoning, music-making, conceptions of self and fairness, large-scale cooperation, etc. — humans and animals vary (hugely) in degree and kind. But they still share those phenotypic behavioral traits.

I’d like to explore one of those unique differences: ownership of property. Animals don’t own property. Ever. They can and do possess and control goods and territories (possession and control are importantly distinct), but they never “own” things. Ownership is a uniquely human construct.

To understand this, imagine a group of tribes living around a common water source. A spring, say. There’s ample water for all the tribes, and all draw from it freely. Nobody “owns” it. Then one day a tribe decides to take possession of the spring, take control of it. They set up camp surrounding it, and prevent other tribes from accessing it. They force the other tribes to give them goods, labor, or other concessions in return for access to water.

The other tribes might object, but if the controlling tribe can enforce their claim, there’s not much the other tribes can do about it. And after some time, maybe some generations, the other tribes may come to accept that status quo as the natural order of things. By eventual consensus (however vexed), that one tribe “owns” the spring. Other tribes even come to honor and respect that ownership, and those who claim and enforce it.

That consensus and agreement is what makes ownership ownership. Absent that, it’s just possession and control.

It’s not hard to see the crucial fact in this little fable: property rights are ultimately based, purely, on coercion and violence. If the controlling tribe can’t enforce its claim through violence, their “ownership” is meaningless. And those claimed rights are not just inclusionary (the one tribe can use the water). Property rights are primarily or even purely exclusionary. Owners can prevent others from doing anything with the owners’ property. Get off my lawn!

Decades of investments by the federal government and industry in five key clean energy technologies are making
an impact today. The cost of land-based wind power, utility and distributed photovoltaic (PV) solar power, light emitting diodes (LEDs), and electric vehicles (EVs) has fallen by 41% to as high as 94% since 2008. These cost reductions have enabled widespread adoption of these technologies with deployment increasing across the board. Combined, wind, utility-scale and distributed PV accounted for over 66% of all new capacity installed in the nation in 2015. [6] Total installations of LED bulbs have more than doubled from last year, [5] and cumulative EV sales are about to pass the half-million mark. [7]

These technologies are now readily available and our country has already begun to reap the benefits through their increased adoption. As these clean technologies are broadly deployed there is a reduction in the emissions that contribute to climate change, the air we breathe is better quality because of a decline in air pollutants, and we are expanding economic opportunities for American workers and manufacturers. In 2014 the manufacturing sectors for wind turbines, photovoltaic panels, lithium ion batteries, and LEDs have added $3.8 billion dollars in value to the U.S. economy. [8]

As we continue to advance international action on climate change under the Paris Agreement – which established a long-term worldwide framework to reduce global greenhouse gas emissions – these five technologies have and will play a critical role in providing opportunities to reach global climate goals. The technologies highlighted in this report exemplify how the clean energy revolution is already underway, is already providing real-world benefits, and continues to promise new solutions on the horizon to address our most pressing energy challenges.

Through the Mission Innovation initiative announced in 2015, 20 countries and the European Union have committed to double their respective clean energy research and development investment over five years. This surge will surely lead to breakthroughs in other clean energy technologies that today still seem futuristic, just as many of the technologies in this report seemed just a few years ago.

We have seen incredible achievements from these technologies, but we must continue to strive to innovate and develop the technologies that remain to be unlocked.

Did Money Evolve? You Might (Not) Be Surprised

You probably won’t be surprised to know that exchange, trade, reciprocity, tit for tat, and associated notions of “fairness” and “just deserts” have deep roots in humans’ evolutionary origins. We see expressions of these traits in capuchin monkeys and chimps (researchers created a “cash economy” where chimps were trained to exchange inedible tokens for food, then their trading behaviors were studied), in human children as young as two, in domestic dogs, and even in corvids — ravens and crows.

But humans are unique in this as in many other things. We use a socially-constructed mechanism to effect and mediate that trade — a thing we call “money.” What is this thing? What does it mean to say that it’s “socially constructed”? What are the specifics of that social construct? How does it work?

Money has lots of different meanings when you hear it in the vernacular. A physical one- or five-dollar bill is “money,” for instance (“Hands up and gimme all your money!”). But so is a person’s net worth, or wealth (“How much money do you have?”), even though dead presidents on paper or even checking-account balances are often insignificant or ignored in tallies of net worth (think: stocks, bonds, real estate, etc.).

You might think you could turn to economists for an understanding of the term. Not so. They don’t have an agreed-upon definition of “money.” The closest they come is a tripartite “it’s used as” description that completely begs the question of what money is: It’s used as a medium of account, as a medium of exchange, and as a medium of storage. I and many others have pointed out the myriad problems with this tripartite non-definition. Start by asking yourself: what in the heck do they mean by “medium” in each of those three? You’ll often hear economists speak of (undefined) “monetary assets,” “monetary commodities,” and similar, attempting to communicate in absence of a definition.

Donald Trump has scored a legislative victory with staggering costs. The price of the tax bill has to be measured not only in the loss American society will face in the increase in inequality, in the impact on public health, and the growth of the deficit, but also in the damage to political culture inflicted by the spectacle of one powerful man after another telling lies of various sorts.

All along there has been Trump claiming that the bill was a “gift” to the middle class. That this assertion appears to have no basis in fact has not affected the President’s statements. The President’s Treasury Secretary, Steven Mnuchin, maintained that his department had run the numbers and had shown that the tax bill would pay for itself. It appears that he lied, not so much about the result of the Treasury’s study but about the existence of the study itself: the Times reported last month that the analysis had not been done.

This was a Trumpian lie, which is distinct from other kinds of political lying. It might be called a power lie: its purpose is not to convince the audience of something that isn’t true but to demonstrate the power of the speaker. Trump tweets blatant lies, repeatedly, to show that he can—and that by virtue of his bully pulpit, his words, however absurd, always have consequences. Mnuchin showed that he can do the same thing, and that he has more power than the opposition.

Other than a small number of fiscal conservatives who are ignored by their own party, it doesn’t seem like anyone really cares about the National Debt any more. That’s a relatively new thing. Doing something about the Debt was one of the platforms of the GW Bush campaign in 2000. Of course, what he actually did to the Debt was the precisely the opposite of what he told us he was going to do. Then came Obama, whose economic policies – certainly with respect to anything that could affect the Debt – could best be described as a continuation of what GW started. Why anyone would look to a disaster as an example to follow, I cannot say, but people who become President tend to be unusual.

At present, it seems that we have entered a period of unholy alliance between most Democrats and most Republicans. The former want to spend taxpayer money on social programs, the latter want to cut taxes and to spend taxpayer money on things that aren’t social programs, and both groups essentially get what they want the most. At least for now. Which brings me to the point. I can’t tell you how all this ends, but I can tell you that the longer it goes on, the less well it ends.

I am going to make a fool of myself by suggesting that a cryptocurrency might actually be useful. Bitcoin et al have negative social utility. They are pure speculative assets which enable people to gamble. Also bitcoin miners use as much electricity as Denmark. The problem is exactly the aspect which has made bitcoin famous and which bitcoin enthusiasts consider a strength — the enormous increase in the dollar price of bitcoin. This increase, and the recent sharp decline, make bitcoin useless as a means of exchange. Most firms don’t want to gamble.

So I (semi-seriously this time) propose botcoin which might have a more stable dollar exchange rate. The idea is to link the blockchain verification program to an official exchange.

Backing up, there are two very different sorts of web-servers related to bitcoin. One set, the bitcoin miners, implements the original idea using the Bitcoin shareware. They keep a copy of the ledger of all bitcoin transactions — the blockchain, race to create new blocks, and evaluate new blocks and add valid new blocks to the chain. The other servers are bitcoin exchanges in which bitcoin is traded for regular currency. They are not part of the original plan in which bitcoin would be traded for goods and services and function as a means of exchange. They have behaved badly with an unstable value of bitcoin (huge unpredictable Bitcoin deflation damages any use of bitcoin as a means of exchange as much as huge inflation would).

I propose linking the blockchain program to an exchange. So there would be an official botcoin exchange (this means it isn’t entirely free-entry shareware libertarian anarchism). If anyone were interested in a new cryptocurrency designed so that speculators can’t become rich (and pigs fly) there would be other unofficial exchanges.

The bitcoin program regulates the frequency of creation of new blocks to roughly one every six minutes. It does this by adjusting the difficulty of the pointless arithmetic problem which must be solved to make a new valid block. The idea was to limit the total amount of bitcoin which will every be created (to 21 million for some reason). This was supposed to make bitcoin valuable. So far it has succeded all too well (I am confident that in the end bitcoin will have price 0).

It is possible to make the supply of botcoin flexible so the dollar price doesn’t shoot up. I would aim at a price of, say, 1 botcoin = $1000. The idea is to make the pointless problem which must be solved to add a block easier if the dollar price of botcoin exceeds the target, and harder if it falls below the target. This should stabilize the price.

Now no one is really interested in cryptocurrency except as a way to gamble and take money from fools. But if anyone were, linking the blockchain program to prices on an exchange would make it more nearly possible to use the cryptocurrency as a means of exchange.

The system is vulnerable to a tacit agreeement to trade only on unofficial exchanges. It is necessary that the problem is also made easier if daily trading volume on the official exchange is zero. The problem is the price could shoot up on unofficial exchanges, but this would not affect the price on the official exchange if there were no transactions on the official exchange.

How Perfect Markets Concentrate Wealth and Strangle Growth and Prosperity

The winners have us all playing a loser’s game

Capitalism concentrates wealth. Ridicule Marx and his latter-day disciples all you like (I’ll help); he definitely got that right.

But capitalism is a big word with lots of meanings, and enough ideological baggage to fill a Lear Jet. Let’s talk about something more precise: perfect markets, with ownership, in which individuals compete with others to produce stuff, and store up savings. You can see this kind of perfect world in agent-based simulations like Sugarscape. Start with a bunch of sugar farmers trying to accumulate sugar in an artificial world, hit Go, and watch what happens.

Here’s what happens to wealth concentration (number of poorer farmers on the left, richer on the right):

When a coach at one of Fayetteville’s top private school basketball programs—a school that also happens to be the state’s top recipient of private school vouchers—pleaded guilty last summer in a Wake County courthouse to embezzling hundreds of thousands of tax withholding dollars he collected over eight years from the school’s employees, he received what some might consider an odd sentence.

Among the punishments handed down by the court for Heath Vandevender’s embezzlement activity at Trinity Christian School was 90 days in jail. He’s completing that sentence this fall by spending his weekends at the Cumberland County Detention Center.

But the sentence also allowed Vandevender to keep his job, despite having embezzled significant sums of money while employed by Trinity Christian—a school that has received more than $1.7 million in publicly-funded vouchers since 2014.